How would you qualify the current business situation in Bosnia and Herzegovina and more precisely in the Sarajevo Canton?
We are half way through our transition process. The most important part of that process is privatisation of state owned industries. But I would like to stress a very specific situation here in Sarajevo, which is the fact that in this city big enterprises were predominant before the war. For example, out of the 10 biggest companies in ex Yugoslavia, 5 were Sarajevo based. We had a predominance of big industry followed by trade, construction and finance. After the war important changes occurred and as you know the privatization process began. However, it did not go in the right direction whereby big scale companies should have been given priority but instead small companies were privatised first, and the larger big companies waited their turn. As the International Community is playing an important role in the reconstruction of Bosnia and Herzegovina, we soon saw that they did not have a deep interest in the large state owned companies, but rather their focus of interest were in the so called small and medium sized companies. Therefore the reconstruction or revitalisation of these big companies did not occur. As a consequence an important change in the structure of the economy has occurred in which the industry is not anymore at the first place or predominant.
Another important issue is that a large number of the population is unemployed. The unemployment rate is 44% and this is very high. I will try to explain to you the present situation in comparison with 1990 or 1991. Sarajevo had 524 000 citizens, out of that number 220 000 were employed, 172 000 people worked directly in economy. On the contrary, today, Sarajevo has between 380 000 and 400 000 citizens, 82 000 are employed, and 63 000 people work in the general economy. Here you can see difference and changes that happened. It is true that in the meantime large number of small size companies were established.
Today, 95% of our companies are small sized companies. Two days ago, I did a presentation for one Japanese delegation, and where I presented them the data about the present situation and the changes that occur. As you can see we have 89 % of micro companies that are the companies that have up to five employees, 7 % are so called small sized companies that have between five and fifty employees, 2 % are medium size companies that have between 50 and 200 employees and 2 % are so called big sized companies/enterprises that have over 200 employees. Namely, out of this number, 90 % are private companies, 5 % are state owned companies, 4 % are joint ventures and 1 % belong to the community (cooperative enterprises). These new companies are not able to solve the problems that appeared due to the destruction of the large enterprises. The International Community reconstructed our economy by investing in infrastructure; there were no direct investments for development of production. USAID gave loans that were unfavourable to us, but unfortunately we did not have any other choice, the return rate period (pay off period) was short but at the same time interest rate was very high. Therefore, after the war the reconstruction was not performed the way we expected it. On another side the state didn't find any solution to social problems. And since at the beginning there were no strategic approaches for solving the problems in the economy, now those problems are solved through some sort of social pressure. We are facing strikes almost on a daily basis. On another side the capital that we expected from abroad started to flow in a bit late. I have to admit that big problems can be found in us, when I say us I mean the state of Bosnia and Herzegovina. There is no security for foreign investments, and now only, the new Government is working on these issues to increase security for foreign investments by reforming the judicial system. There is no adequate Legal Framework for protection of foreign investors. The problem is that we have a situation where the industrial disputes in Court take a long time to be solved. We in the Chamber requested that a Special Court should be established which would deal with such kind of problems.
What are the steps needed in order to speed up the recovery of the Bosnian economy?
In the last few months, the government undertook a few positive processes, and for a long time already we stressed the need for such kind of processes, but unfortunately we were not able to find a compromise with the previous government. We had problems with them, because they were not ready to accept our autonomy, but somehow we made it, we are neither political nor a state Chamber. We are independent mainly because we had democratic elections in the Chamber. Each individual who is in a managerial position is elected by secret voting for example election of our Parliament our Steering Comity/Management Board, President etc. This government already prepared the strategy for the next five years. The slow process of privatisation is creating a lot of problems. The major problem is that it is not possible to find the investors/buyers for non-profitable companies. In normal circumstances those companies should be declared bankrupt. But the state is not ready to tackle that problem; the state is concerned about social response.
What is needed to attract further foreign investors?
There are mainly two problems: lack of information and lack of a legal framework for the protection of foreign investments. However, there is one more problem, which is that we do not know how much we are competitive with other neighbouring countries !
You have very skilled workers…
Yes, we do. The point I want to raise is that we should research to see what kind of conditions or benefits other neighbouring countries are offering to foreign investors, for example Croatia, Yugoslavia, Hungary, Bulgaria, Rumania etc. Once we know what conditions are offered, we can offer better ones. We pointed out several times that there is a need to develop such kind of comparative analysis. I think that we are not competitive in comparison to other countries. We are of the opinion that the government should urgently address this issue as well as develop better legal regulations, which will protect foreign investors. |
That is the biggest problem for me. I can give you one example to support this: let's say that you bought one part of a company during the privatisation process, and now you are owner of your share, you started production, in remaining parts of the company which is not yet sold, employees are on strike: they simply block the road to the company, although you don't have anything to do with that, you would like to work in your company, but the problem is that you cannot get in your company because of the strikes…The police is not reacting, because mostly war veterans are involved, or maybe because they are refugees, etc. It would be natural for the police to react, or at least to clear the road. Those issues are not legally covered. In every country we have some sorts of expressions of unhappiness, we can find such examples in any country in the world, but in many cases the owners of the companies are not affected by those actions. Usually, the state provides the right conditions to do business.
Another case; for example certain company owes you some money, and refuses to pay you back: you sue that company, then procedures in the Court starts and you wait two or three years for your case to be heard in front of the Court, and if the Court Verdict is in your favour and the courts orders to the other party to pay his debts, and other party does not do it, then in normal circumstances the bankruptcy actions will be taken against him (to sell his property and compensate his debts) or even criminal charges, but such kind of procedures do not happen here. That is the main problem and the state should do something about it. Besides all these problems, we have successful companies that developed from small to big size companies. Recently, five businessmen started an initiative in which they proposed to the state building a highway with a state assistance. And they are from both Entities. Interesting fact is that they do not care about entity borderlines. The names of the companies are: Širbegovic, Bobar, Lijanovic, Grizelj, and I can't remember the name of the fifth one. The Chamber supported their initiative and efforts. We even published statement of support, but unfortunately only Cantonal TV broadcasted it.
We understand their proposal as something more than an initiative; it is rather direct initiative to integrate our economy. I am of the opinion that we should integrate economy in Bosnia and Herzegovina as soon as possible, and economic integration will help political integration. The businessmen will not support the people that will try to destroy that integration because their interest is at stake. And it is chain reaction. And in this way I can see that Bosnia and Herzegovina can recover. Our chances are good, but the major issue is our mentality.
You were recently awarded ISO 9001 certification. What does that achievement represent for the Chamber of Commerce?
We completely reconstructed the Chamber of Commerce after the war. We got the chance to employ new people who didn't have the opportunity to work in previous system. Out of 50 employees that have been working in the Chamber before the war, 6 are still with us. Our employees are eager to learn and explore, so it was easy for us to develop new model of organisation in our Chamber. We have support from our members, and we are always at their service. The Chamber is offering it services in two directions; when companies are seeking some information or service from us, our feedback is always professional; secondly, when our members are asking for our assistance for the issues that are related with the state, we have to understand their request, and on another side we have to solve the issue in a way in which the state will understand us as a partner, of course taking arguments into consideration. Our organisation is established in the way, which enable us to undertake professional decisions. I will give you an example that will surprise you: we have 12 Counsel Bodies (Consultancy Bodies). One of them is a body for the entire Chamber, and the remaining 11 are divided in accordance with the sectors. Those Counsel Bodies are composed of: 16 holders of PhD-s, and the head is the president of Academy of Arts and Science Prof. Dr. Božidar Matic - he is the previous President of the Council of Ministers. Presently, two Ministers in Council of Ministers are our members, Anto Domazec the Minister of Treasury, and Azra Hadžiahmetovic, the Minister of External Trade. They were our members before they were elected to their respectful posts. The Rector of Sarajevo University Prof. Dr. Boris Tihi is also our member. Half of the members of the Council are University Professors and another half are from various companies. We wanted to combine science and practice. For instance when we are discussing proposal of the law, or some strategies, then the Council discussed it and reports it to me, Parliament or Management Board of the Chamber, then we process it to the State Agencies. They respect our decisions. We organised the last two sessions of the Government here in the Chambers.
As far as our certification is concerned, we introduced International norms and standards in our work and waited to get certificate on that. The Agency that awarded us the Certificate admitted to us that they learned something from us. We follow standards and respect procedures that we had already adopted. We are currently facing some small problems with paperwork but that will be overcome soon by Computerisation of our institution. We are Internet providers for a number of our members. We also notice that our members do not often use Internet and Information Technology, and there was big resistance to introduce Information Technology in their daily work. We approached them by offering them Computers at reasonable costs, training to their employees, Internet connection to our server and development of websites that will be accessible by link from our website. We consulted 350 companies, but this year as soon as we started charging our services the number decreased since. We don't have plans to be Service Providers for the future and most probably we will leave this job to our member companies that will have a large market.
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